What do I need to pitch a business idea?

It is very common to hear someone trashing business plans as an instrument of medieval ages when pitching your idea to a potential investor. And I think that the discussion is not binary. It is a matter of length, more than doing it or not. From my experience both as an early-stage investor and as advisor to early-stage and established corporations, there are four deliverables that makes sense to have to pitch someone:

• A business plan that outlines the opportunity, the market, the problem, the project, who is behind it and what is the plan in terms of roadmap, sources and uses and financial projections. It should’t be more than 10-20 pages.
• A teaser, which is basically a document with one or two pages covering the main areas of the opportunity, but without telling to much on the numbers or valuation side since the idea is that you use it to attract investors that you do not have a close relationship.
• A financial model, which projects supply and demand dynamics, operational expenses, capital expenditures and how all that impacts in the Income Statement and Free Cash Flow statement. Some projects might make sense to forecast the first 12-18 months, some others need a longer horizon mainly depending on how much money you are raising and how fast you can reach break even.
• A presentation or deck that summarizes in 10-15 all the information that is on the business plan in a more visually appealing version.

The problem with business plans particularly, and I think that it is one of the reasons why some people hate them, is that it is very common to see extremely long documents that are a pain to read and most of the information contained there is not so relevant for the pitching process. But if you stick to creating a business plan with 10 or 20 pages it makes more sense. It is something doable and probably you won’t need to make up a lot of stuff that you don’t know yet, you just write all the rights answers regarding how are you planning to execute your project. That’s why it is called a business plan.

I know that many projects got funded just by showing a deck, or a prototype, or over drinks. But on the vast majority of cases investors prefer to see tangible information on how you thought about the most critical issues of your project. And sometimes a deck, a prototype, or a 10-minute happy hour interaction falls short.